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Markets continued to rally in August, with all three major U.S. indices setting new record highs. While there was some mid-month volatility, markets were able to bounce back swiftly toward month-end.

April was a strong month for U.S. equity markets, with the three major indices setting all-time highs. Markets were supported by public health improvements and the most recent round of federal stimulus.

U.S. stock markets saw gains for the month and quarter, but not all stocks did well. Higher interest rates led to some volatility, especially for growth and technology companies.

For the fourth week in a row, the big picture continues to be very positive. On the medical front, all three major data series—new cases, positive testing rates, and hospitalizations—have continued to trend down, while vaccinations continue to scale up. If these trends persist, we are through the worst of the pandemic and should see further improvement.

Wednesday, January 6, 2021, will be remembered in the history books—for a couple of reasons. First, while Congress met to count the inaugural votes, we anticipated that members from both houses would be objecting to electors from some states. What we didn’t anticipate was that the Capitol would be besieged by an angry mob that delayed, but did not prevent, the ultimate announcement of Biden’s victory. We also learned the outcome of the Georgia Senate runoff, which saw both seats won by Democrats. As a result, come the inauguration, all three arms of government will now be under the control of the Democratic Party. What will a blue government mean for us as investors?

We’re nearing the end of a hard year, with the pandemic raging once again and the economy starting to slow. On the other hand, vaccines will soon be coming into play, companies are adapting, and there is the possibility of a spending boom next year. Despite risks ahead (e.g., the chance of another surge of infections with holiday travel), could 2021 be better for medical news, for the economy, and for the markets?

Authored by Brad McMillan, Commonwealth CIO:

As of Monday, October 12th, the markets spiked again, taking the major indices back close to new highs. The S&P 500 closed at 3,534, less than 2 percent below the all-time high of September 2, just before markets tumbled. The Dow and Nasdaq results were similar. Clearly, the markets think everything is awesome. Is everything awesome?

Authored by Brad McMillan, Commonwealth CIO:

Recently, I have been getting a number of questions from people who are scared about what might happen to the financial markets at election time. The fear is that if we get a disputed election, it could lead to disruption and possibly even violence.

After a great month like August, expectations and momentum are high, and you could reasonably expect to see another great month ahead. That scenario happens, and it is certainly what we are seeing in the first days of September. But taking a detailed look at last month’s results suggests some reasons for caution.